Suppose that someone owns an aircraft outright, but wants you as a syndicate partner. The deal works out like this:

1. You buy your share of the aircraft, say half, and pay the current owner.

2. There are costs to just owning the thing - mainly insurance, hangarage/airfield fees and regular/annual maintenance and inspections. You share these between you. It's common to work out a monthly payment into a shared bank account which will cover these costs ("monthlies").

4. Unknown future costs - major overhauls, replacement of major parts like an engine, etc. If you both have deep pockets you can pay for these as they occur. Or you can pay regularly into an account which you hope will cover them, often known as an "engine fund".

Then you need a syndicate agreement to cover things like who has the aircraft in preference to the other, how to decide about things like upgrading instruments, refurbishing worn things, what happens if one of you wants to sell, etc. This agreement might be verbal, or it might run to several pages.

That's the simple version. In a complicated syndicate with lots of partners owning unequal shares, you have to modify the basic scheme to fit in with the needs of the group.

PaulB wrote: ... he may want to get the group together first then buy the aeroplane as a group.

Miscellaneous wrote:That's a novel thought. I wonder what the success rate for that route is? I'd suggest that is not the way forward.

I certainly joined a group on such a basis and it worked out well, all be it that the proposed Chipmunk somehow became a Yak 52 in reality

Rob P

We set our RV7 up that way as well, seemed to work pretty well for us! In fact when some of us were looking for something to use for instructing tailwheel and aeros we did much the same with some of the RV members and a couple of others!

All the above are relevant and of interest. However, say an aircraft is in a syndicate of 2, "A" flies 66% of the time and "B" flies 33% then something unexpected and expensive crops up, how will it be paid? 50/50 or 66/33? These things need to be written down and agreed to at the beginning of the syndicate. Similarly repairing any damage, he who caused it 100% (assuming it can be proved), ownership 50/50 or usage 66/33? A potential can of worms.

I would advise any syndicate to have a written set of rules, 99% of the time you will not need to bother with them but essential for that one time you get someone that is abusing the system, it also means all members know where they stand, I think the LAA has a sample that you can copy or I am happy to send a copy of the rules we have!

Popeye wrote:All the above are relevant and of interest. However, say an aircraft is in a syndicate of 2, "A" flies 66% of the time and "B" flies 33% then something unexpected and expensive crops up, how will it be paid? 50/50 or 66/33? These things need to be written down and agreed to at the beginning of the syndicate. Similarly repairing any damage, he who caused it 100% (assuming it can be proved), ownership 50/50 or usage 66/33? A potential can of worms.

If you go 66/33, surely the 66% person will just say that they can do what they want because they own more than 50% and can therefore outvote the 33% person.

Whatever, these sorts of things need to be covered in a set of written rules that all agree to which may cover things like that and how many weekends ahead can be booked up etc.

It's often said that the members of any syndicate are as important as the aeroplane........

Paul

The forum seems to have stopped logging me out at random intervals. Perhaps they like me after all? (Thanks for fixing it) Our pleasure!

You could argue that the hourly rate would include a proportion for items that "wear out" or have an hourly limit (like engines, mag checks, tyres 50hr checks etc) so the 66% flyer would be contributing more to the kitty for those.

Usually the share volume determines the liability but other models are possible. Say an owner wants to keep a controlling share so the other shareholders are minor shareholders but there is an agreement that reservations go in a pot on a 50/50 basis.

My experience tells me that agreeing things beforehand and making sure there are adequate reserves ensures there is rarely a problem.

Most agreements aren't really legally enforcable (either cost more to enforce than they are worth or legally not quite right). The other danger is that instead of talking to each other as humans, group members will try to "assert" their rights, which rarely helps anyone. They do help with new group members knowing the group ethos, where they stand, and can help in divorce or on death of a group member when a clean separation from the asset can then be made.For larger groups, a trusted management team of a couple of individuals able to execute things to the groups benefit without having an EGM every week keeps things moving and helps everyone.

I'm in 2 large groups which don't have a written constitution. One has ran effectively for 20 years without issue. The other has been going a few years but one new member has come in and disrupted it, causing the group chair to resign (who had been doing a good job). We are talking about putting together rules with the sole purpose of removing that individual from the group, then removing the rules again.